In traditional non-cash transactions, a buyer is required to provide to the seller some payment information with which the seller or payee (receiver of funds) “pulls” funds from the payer's account. Such an account may be held by a financial institution like a bank or credit union or it could be held by a card company and in some cases by third parties like Paypal.
For example, in a card-present transaction, the card is handed to a cashier who then electronically or manually accesses the card information (either from the magnetic strip or off the face of the card) and uses it to pull funds from the payer's account. In a card-not-present transaction, such as on a website or on a call with a sales associate of a merchant, the card information is provided to the seller or seller's agent and then this card information is used to pull funds from the payer's account. Often, in addition to payment information, additional information such as billing address, shipping address and phone numbers are also required to complete the transaction. The cards used in both card-present and card-not-present transactions, may be credit cards, debit cards (both PIN and signature) as well as gift cards (both open loop and closed loop).
In a check transaction, a check with the routing number, account number and funds amount is provided to a seller or seller's agent or payee and the information on the check is used to pull the funds. Several alternative payment schemes have emerged where the payer's information is kept hidden from the seller, seller's agent or receiver of funds (payee). In such payment schemes a trusted third party still acts as the escrow and holds the relevant information. This party may still “pull” the funds from a payer's bank account or credit card as in the case of PAYPAL or directly offer credit as in the case of BillMeLater. In these cases, nevertheless, the Point-Of-Sale (POS) resides with the merchant. Recently gift cards have emerged as a mechanism for transferring funds without disclosing payer's information. However, the gift card number and associated information itself is often adequate to access the funds stored in the card. The same is true for mobile devices with stored funds using technologies like Near Field Communications (NFC).